So much for the break for U.S. motorists at the gas pump. Gasoline prices have rebounded about 10 cents in the last week alone, to an average unleaded regular price of $2.54 per gallon, according to data compiled by gasbuddy.com. U.S. motorists had hoped for a gas price decline of about 30 cents on oil's plunge from $72 per barrel to $57 per barrel earlier this summer. It did not happen. The price of oil didn't remain lower long enough, with gasoline dropping only about 15-20 cents per gallon across the nation, before rebounding in late July.
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What's more, with oil prices surging over $70 Monday on additional data that suggests the U.S. recession has bottomed, the outlook for U.S. motorists is not pleasant.
The oil bulls are making the case that oil will trend toward $80, then $90 per barrel. And here's their reasoning: 1) rising global demand for oil in emerging markets, due to the global recovery; 2) a return to rising U.S. gasoline demand, from flattish demand, as job lay-offs decrease; 3) the reluctance of OPEC, at least initially, to increase production, to reap the benefits of higher prices, and 4) discipline by U.S. refiners, who took refining capacity out of production, when margins slumped earlier: those margins have since improved.
Add it up and an $80 oil price is plausible in the next two quarters. And $80 oil would send gasoline prices up another 25-30 cents to about $2.85-$2.90 per gallon nationally for unleaded regular gasoline. Ouch.
Further, high oil prices put the energy problem, and its drag on U.S. GDP, front-and-center again - all the more reason for the United States to continue to increase energy efficiency throughout its economy.
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